US Insurance Commissioners Endorse Internationally Recognized Weather Risk Disclosure Standard for Insurance Companies

The bipartisan action requires the use of the Task Force on Climate-Related Financial Disclosures for the annual state-led survey to protect consumers beginning this year.

KANSAS CITY, Missouri., April 8, 2022 /PRNewswire/ — A bipartisan group of state insurance regulators led by Insurance Commissioners Ricardo Lara from California Y david altmaier from Florida adopted a new standard for insurance companies to report their climate-related risks, in line with the International Task Force on Climate-Related Financial Disclosures (TCFD). The TCFD standard is the international benchmark for weather risk disclosure and will help insurance regulators and the public better understand weather-related risks to the US insurance market, which is the largest of the world. This announcement during the spring meeting of the National Association of Insurance Commissioners (NAIC) in Kansas City, Missouriputs US state insurance regulators at the forefront of weather risk disclosure to protect consumers.

Commissioners Lara and Altmaier are co-chairs of the NAIC Climate Risk and Resilience Task Force (Task Force), which was established in 2020 to coordinate all NAIC national and international efforts on issues related to risk and resilience. weather related. The task force developed the new TCFD-aligned survey during a 14-month public engagement process led by the Oregon Insurance Commissioner. andres stolfi Y Rhode Island Superintendent elizabeth dwyer in coordination with Commissioners Lara and Altmaier, and marks the first update to the NAIC’s Climate Risk Disclosure Survey approach since it was created in 2010.

The working group determined that implementing a TCFD-aligned disclosure framework would improve transparency on how insurance companies manage climate-related risks and opportunities and incorporate international best practices, among other benefits the working group identified in the new standard. insurance regulators France, Swissand the United Kingdom they currently require TCFD-aligned reporting. US financial regulators, such as the US Securities and Exchange Commission, are also taking steps to require TCFD-aligned disclosures for other financial institutions.

Under the new standard, insurance companies that are required to respond to the NAIC’s annual Weather Risk Disclosure Survey will be required to comply with TCFD reports before November 2022. Fifteen states, including California, Connecticut, Delaware, D.C.Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, VermontY Washington – have committed to using the NAIC survey in 2022 for insurance companies licensed in their jurisdictions, which represent nearly 80 percent of the US insurance market, while 28 insurance companies provided TCFD-compliant reports by 2021, this list will grow to nearly 400 insurance companies and groups as a result of the consensus demonstrated today.

“Our global climate crisis touches every state, requiring us to reach across partisan divides to find solutions that protect all people,” said the California Insurance Commissioner. Ricardo Lara. “By forcing insurance companies to comply with this global standard for climate disclosure, insurance regulators are showing the power of united leadership in our efforts to address climate change and reduce negative impacts on insurance consumers.” .

“The NAIC’s action demonstrates that our state insurance regulatory system remains strong and flexible in responding to changing conditions in our markets and our world,” said the Florida Insurance Commissioner. david altmaier. “Thank you to my fellow regulators for your commitment to working together to protect consumers.”

“We’ve all been affected by weather-related events, including wildfires, floods, and an increase in extreme weather. The NAIC’s first climate risk survey, created more than 10 years ago, led the way back then, and it’s great to see the NAIC lead again by being the first regulator in the US financial system to adopt TCFD-aligned disclosure requirements,” said Oregon Insurance Commissioner andres stolfi. “I am grateful for the strong engagement in this process over the past year and the strong support for adopting internationally aligned climate risk disclosures, and I look forward to continuing our work supporting insurers in moving to this new reporting framework.”

“The enactment of the TCFD standard will give insurance regulators greater oversight of insurance companies’ strategies to address climate change through investments, board governance and all areas of their operation, which will help us protect consumers in the future by reducing climate risks,” he said. elizabeth dwyerSuperintendent of Banking and Insurance of Rhode Island.

“Our bipartisan action to support a common standard for insurance company weather risk disclosure shows that progress is possible in protecting consumers from the threats of global warming,” said the Maryland Insurance Commissioner. kathleen birrane. “Through our collective actions at the state level, we are protecting consumers from climate risks that affect our entire nation.”

“I am delighted that the NAIC has adopted changes to our NAIC Climate Risk Disclosure Survey. Participating insurers will now disclose their climate change exposure using the internationally accepted TCFD,” he said. mike kreidlerinsurance commissioner of Washington and member of the Sustainable Insurance Forum. “Nearly 20 years ago I had the privilege of beginning to create the Survey with my then co-chair of the Climate Change Committee of Nebraska. I am pleased that the Survey is now updated to reflect state-of-the-art disclosure requirements in line with international standards.”

“Few regulators have more experience and insight into the macroeconomic effects of climate risk than insurance regulators,” he said. mike consedine, Executive Director of the National Association of Insurance Commissioners. “By modernizing the NAIC Climate Disclosure Survey for the first time since its inception, participating members are taking a comprehensive and unified approach to protecting consumers through our state insurance regulatory system.”

International regulators and climate groups that have called for compliance with the TCFD disclosures welcomed the news.

“With investment and underwriting from insurance companies reaching across the globe, it is critical that insurance regulators speak the same language as we seek to protect markets from weather risks,” he said. Anne Sweeneywho oversees the United Kingdom insurance sector and serves as Chair of the UNDP Sustainable Insurance Forum. “With this historic action by US regulators, along with the work of several leading jurisdictions, we are well on our way to holding the global insurance industry to the same standard, enabling nations and states to work across borders like never before.

“By putting US insurance companies on the same level of accountability and transparency with other global insurance sectors and markets in terms of managing and disclosing weather risks, US state insurance regulators are showing the kind of leadership on a national scale that will help meet global requirements.” goals of climate-resilient communities and net-zero economies,” said Butch Bacaniwho leads the UN Principles for Sustainable Insurance Initiative, the largest collaboration between the UN and the global insurance industry.

“Aligning U.S. insurance company climate disclosures with the global norm is a major step forward in protecting financial markets and consumers who depend on insurance for their safety and protection,” he said. steven rothsteinManaging Director, Ceres Accelerator for Sustainable Capital Markets “The bipartisan leadership of Commissioner Lara of California and Commissioner Altmaier of Florida it is scarce all over the world. It is needed more than ever as we address climate-related financial risks in investment portfolios and global supply chains.”

Media Notes:

  • The Task Force on Climate-Related Financial Disclosures published the standards in 2017. The Task Force consists of 31 members from the G-20 nations. Click here to read more: https://www.fsb-tcfd.org/

  • TCFD reports include sections on governance, strategy, risk management, investments and metrics, which require companies to measure their progress and commit to reducing climate risks in all areas of their business.

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SOURCE National Association of Insurance Commissioners

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